Duties on Steel and Aluminum Could Impact Consumers Across Various Industries

America faces familiar consequences as President Trump reintroduces tariffs on imported steel and aluminum, similar to those imposed in 2018. With new tariffs set at 25 percent, industries reliant on metal goods, such as car manufacturers, home builders, brewers, and energy companies, are bracing for higher costs.

A Repeat of the 2018 Scenario

‍This is not the first time U.S. manufacturers have faced such tariffs. In 2018, truck manufacturers, appliance makers, and construction equipment producers scrambled to source domestic metals to stay competitive. However, companies needing specialized alloys, which aren’t made in the U.S., faced higher prices, driving up the cost of their end products. The same pattern is expected to unfold again with these new tariffs.

Yet, some uncertainties remain. Could President Trump strike deals with certain countries to allow metal shipments without the 25 percent duty? Would there be a process for companies to apply for hardship exemptions? A White House official stated no exclusions would be granted, leaving businesses to proceed cautiously ahead of the March 12 implementation date. According to Angela Holt, who heads the Indiana Manufacturers Association, the tariff’s impact will vary across industries, depending on their specific supply chains and competitive landscape.

Lessons from 2018

‍While the American steel and aluminum industries have shrunk since their peak in the 1970s, they still import a significant amount of steel—about 26 percent of total usage. U.S. steelmakers currently operate at only 70 percent capacity, and Chinese exports have recently undercut domestic producers. However, the previous round of tariffs showed that foreign exporters absorbed a portion of the 2018 duties by reducing their prices. A 2020 study found that foreign suppliers took on roughly half of the steel tariffs.

Even with the steel and aluminum prices rising by 2.4 percent and 1.6 percent, respectively, in 2023, many downstream industries still experienced increased costs. The stock market responded positively to the announcement, with U.S. metals processors like Nucor and Steel Dynamics seeing a rise in stock prices, anticipating stronger demand from domestic industries.

Potentially Worse Impact This Time Around

‍‍The economic landscape has shifted since 2018, and the effects of the new tariffs may be more severe. High interest rates, a strong dollar, and labor shortages could exacerbate manufacturing challenges. Moreover, the impact of the tariffs on the broader economic situation could place additional strain on industries already operating under tight margins.

Industries Most Affected by Metal Tariffs

‍The International Trade Commission’s 2018 report highlighted key industries most reliant on steel and aluminum. The automotive industry, particularly motor vehicle metal stamping, remains one of the largest consumers of steel, with auto manufacturers using specialized alloys not readily available from U.S. suppliers. Even Tesla, in 2023, petitioned for an exemption, citing the need for foreign steel for its Cybertruck.

The construction industry is another major user of steel, particularly rebar, which could raise costs for developers and home builders. Carl Harris, chairman of the National Association of Home Builders, stated that the tariffs could undermine efforts to make housing more affordable, resulting in higher home prices.

The aluminum tariffs also impact other industries, such as brewing and soft drink bottling, where aluminum is crucial for production. In 2018, these tariffs added an extra half a billion dollars to production costs for the American Beverage Association.

Uncertainty in Other Sectors

‍The impact on industries like aerospace and energy is still unclear. Boeing, for example, sources the majority of its aluminum domestically, and previous tariffs had limited effects. However, the company did express concern that rising aluminum prices could disrupt their ability to deliver jets on time. Additionally, the energy sector could see cost increases for oil and gas drilling equipment, pipelines, and even renewable energy components like solar array racks and wind turbine towers.

In conclusion, while the reimposition of tariffs on steel and aluminum is expected to boost U.S. producers, the added costs could ripple through a range of industries, with consumers bearing much of the burden. The full economic impact will depend on the specific sector and how companies adapt to these changes.

Originally reported by Josh Boak in AP news.